Telstra's multi-million dollar funding of National ICT Australia (NICTA) research over the next five years will go some way to fill the gap in the research organisations funding hole left by cuts in the budget this year, but government funding is still required, according to NICTA's director of broadband and the digital economy, Dr Terry Percival.

NICTA was only funded out until 2016 in this year's federal budget, with Communications Minister Malcolm Turnbull indicating that the organisation would be called upon to rely on private sector funding for its future.

"It was always expected that funding from the private sector would play an increasingly important role in supporting NICTA's operations," Turnbull said at the time.

"NICTA's rapid growth in commercial revenue, through its partnerships with domestic and overseas firms, shows it can draw funding from a wider range of sources."

Today, the company announced the first of its private partnerships with telecommunications incumbent Telstra stepping up to invest millions in NICTA over the next five years to research across security, privacy, network planning, media, and cloud projects.

"They're projects we've started working on in the last month with Telstra," Percival told ZDNet. "Some of it is almost new areas, so it is a bit of a mixture."

One project will see NICTA research the risks in migrating legacy application to cloud platforms, and area of increasing interest to Telstra as the company embarks on a multi-billion dollar investment in cloud technology and products.

There will be 10 research staff working part time on the Telstra projects from the networking, software systems, optimisation, and machine learning groups.

"Most of our projects will be finished within 12 months on the first round, but we're already looking at planning for where we proceed for the long term."

The amount of money Telstra invests will vary depending on the project, and NICTA, which has been known to spin-off projects into new companies in the past, may still spin off some of these projects, but Telstra's part in that new company may vary.

"We're working that out on a project-by-project basis to determine what makes sense," Telstra's chief operations officer Kate McKenzie told ZDNet.

The company will also work with the University of Technology Sydney, Deakin University, and the George Institute on research projects.

Percival said that the funding provided by Telstra will go part of the way to fill the gap left by the government's cutting of investment, but would not provide funding for all of NICTA's projects.

"It doesn't replace the sort of shortfall we'd be expecting in 2016. It is an example of the way forward we were planning; doing long-term strategic partnerships with large Australian corporations."

The Telstra agreement was the first of a few in the pipeline, he said, with discussions underway with transport and finance companies in other areas.

"Having said that, there is no research agency anywhere in the world that survives purely on industry funding. We have 280 PHD students on our books that need support, supervision and funding," he said.

"We do fairly blue-sky research, and none of that will be funded by industry, so this helps keeps NICTA going forward, but it doesn't fill that gap."

In a statement, Turnbull today welcomed the investment by Telstra.

"It is great to see first-class organisations like Telstra and NICTA working together to accelerate innovation. If Australia is to retain its competitive position in the global economy and support the growth of advanced, knowledge-intensive industries, partnerships like this are vital."